DALLAS - "The economy is picking up." "Mild recovery isgathering momentum." "The economy turns the corner." While thelanguage may have been slightly different in each speaker'spresentation, the overall assessment of the nation's economicstatus presented by three economists at Southwest Corporate FederalCredit Union's 26th Annual Economic Forum Oct. 28-29 was prettymuch the same. "I think we are on the cusp of a sustainablerecovery," said Christopher Low, chief economist for FirstTennessee Capital Markets, as he gave attendees a Wall Streetperspective on the economy. "GDP is accelerating, but it takes thejob market time to turn around after recessionary thinking.Companies are playing it safe." Low called unemployment claims aterrific leading indicator of recovery. After peaking in Sept.2001, unemployment claims dropped to pre 9/11 levels, but have notfallen below that level in the last year. "When claims first startto fall sharply, it will be a strong sign the recovery can sustainitself," he said. Low believes manufacturing jobs lost to India andChina will be replaced in small entrepreneurial business start-ups.He could not venture a guess at the types of industry that mightevolve, but suggested they likely would not be labor intensive. Lowsaid a low interest rate environment and tax cuts have fueledconsumer spending. Mortgage refinancing kept consumer spendingpositive through the recession. Low cited estimates that half ofall mortgages in the U.S. were refinanced last year. On the flipside, corporate recovery has been slow, but optimism is picking up,Low said. Capital spending, hiring, and profit margins have risenfor 3Q 2003. Large firms, such as UPS and Yellow Trucking, he said,have been hiring new employees. "They're not hiring because theywant to, but because they have to. That indicates demand for theirservices by other businesses is picking up." Concerning interestrates, Low predicted the Fed is on "perma hold" until at least July2004. "The Fed is interested in preventing inflation from fallingtoo low. Short-term rates are not going to go up; long term rateswill fall before going up," he said. Bill Hampel, chief economistfor Credit Union National Association, gave forum attendees acredit union perspective. Through 2004, he predicted inflationwould remain under control, with short-term rates gradually rising.Barring a catastrophic event, such as another terrorist attack, heforesees small risk of double dip recession. His outlook for creditunions in 2004: stronger loans, softer savings, flat liquidity,somewhat lower earnings, and a slight drift downward in net worth.Hampel expects balanced loan/savings growth of around 8% next year,although he said loan growth could march as high as 12%. Heprojects loan growth for 2003 at 10%. Offering a nationalperspective on the economy, former Fed Board Governor Larry Meyersaid the country is entering the first year of normal expansion."The key to normal expansion after a recession is how quickly youmove to above-trend growth and the unemployment rate declines. It'sa very big moment in the life of the financial market when you moveon a stable basis to above-trend growth, because then unemploymentstarts to decline. After a point, inflation will stabilize andbegin to rise, and interest rates will begin to rise. "The economyhas been expanding for a long time; recession is dated to haveended in November 2001, but falling employment has been theAchilles heel here." "The word we hear more and more today issustainability. There are real concerns about how to keep theeconomy growing at above-trend rate with the employment ratefalling. The next 2-3 quarters look okay, but by middle of nextyear, we do have some issues to worry about." Meyer listed concernsas declines in contribution from inventory investment, decline infiscal stimulus, decline in mortgage refinancing, and the trendtoward outsourcing abroad. Dynamics of the first year of recovery,Meyer said, will include inventory replacement, a release ofpent-up demand for equipment and high-tech purchases, laggedimprovement in employment, a rebound in productivity, a surge inprofits and disinflation. Meyer forecast GDP growth at 5% for the2nd half of 2003, falling to 4.25% next year. He predicts theunemployment rate has peaked at 6.2 this year and will fall slowlyto 5.6% by the end of next year.